New York—Despite sales at some of its Saks Fifth Avenue and Off Fifth stores being negatively affected by Superstorm Sandy, Saks Inc. today reported a net fourth quarter profit that beat analysts’ expectations.
While the luxury retailer had previously warned it expected flat comparable store sales and gross margin for the quarter due in part to soft results the first two weeks of November, the company posted a profit of $20.4 million, or 13 cents a share, for the quarter ended Feb. 2, compared to a profit of $40 million or 21 cents a share a year ago.
Excluding store closing expenses, asset impairment charges and other one-time expense items, Saks Inc. had a profit of 17 cents a share.
Net sales rose 5.6% to $976.6 million while comparable store sales were up 0.7%. Gross margin, too, widened a bit to 37.7% from 37.6%.
Analysts’ average estimate expected earnings of 15 cents a share on sales of $963.4 million.
Superstorm Sandy, which struck the Northeast the final days of October 2012, affected about 55% of its total company store revenue base. Due to the storm and resulting flooding and power outages, 11 of the 45 Saks Fifth Avenue stores were closed from one to seven days, including the New York flagship, which was closed for two days.
Despite that negative effect, the company reported strong sales in several categories.
“Several merchandise categories showed sales strength during the fourth quarter, including women’s contemporary apparel, advanced European designer apparel, and shoes; men’s contemporary apparel, shoes, and accessories; handbags; and fragrances,” said Stephen I. Sadove, chairman/ceo. “As expected, the New York City flagship store sales lagged the Company-wide performance for the quarter, due in part to the impact of Hurricane Sandy.”
2013 ‘A Volatile’ Year
Looking ahead to 2013, Sadove said “we expect the external environment to remain somewhat volatile. There are several macro factors, such as higher tax rates on the more affluent and the unknown resolution of pending fiscal matters that could create additional uncertainty, particularly in the first half of the year.”
The company said it expects its comparable store sales for 2013 to increase 3% to 5% for the fully year and comparable store inventory levels to be up 3% to 5% for the year. And the company expects its gross margin to increase 20 to 40 basis points above the 40.6% rate achieved in 2012.
Net capital expenditures of $140 million to $150 million are planned for the year, with about $75 million for Saks Fifth Avenue store renovations, new vendor shops and about $55 million for Project Evolution and other technological enhancements.
The balance primarily relates to Off 5th and maintenance capital. Sadove said the company will continue with its aggressive strategy of expanding Off 5th
“We have plans to add seven new stores and one replacement store and to renovate four others in 2013,” he said.
Another goal of providing customers with “any channel, any device, any time” shopping will be ramped up. “During 2013, we expect to begin capitalizing on our shared inventory capabilities with the implementation of order management and product information management tools,” Sadove said. “By mid-year, we plan to be fully operational with our ‘buy-online, ship from store’ capabilities.”
Earlier in the month, Saks Inc. announced that Myron “Mike” Ullman, the retired chairman/ceo of JCPenney, has been appointed to its board of directors. Ullman
will serve on the Audit and Corporate Governance Committees.
Prior to his tenure at JCPenney, Ullman served as directeur general of LVMH in Paris; chairman and chief executive officer of DFS Group Limited; and chairman and chief executive officer of R.H. Macy & Co., Inc.
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